Asian housing: Ride the cycle

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Date Published 2015
Primary Author Enam Ahmed
Other Authors Samantha Amerasinghe Kelvin Lau Lan Shen Edward Lee Chong Hoon Park Kathleen B. Oh
Theme Real Estate Cycles and Bubbles


? Housing cycles are playing a major role in Asian economies, with some markets experiencing a rollercoaster ride. We assess the outlook for house prices and construction in China, Hong Kong, Korea and Singapore and weigh the economic implications. ? We estimate the slump in house-building in China accounts for half of the GDP slowdown since 2010, taking into account linkages with related sectors. The construction sector should start recovering after 2017. China still needs to build 150mn housing units by 2030. ? Hong Kong and Singapore are conforming to the 18-year price cycle often seen in housing markets. With Fed rate hikes looming we expect Hong Kong’s prices to fall 10-20% in the next two to three years. In Singapore prices are already down and a further 5-10% fall is likely. These corrections should be manageable as economic fundamentals are sound and US rate rises will likely be small. ? Asian governments are very active users of macro-prudential policies. China and Korea have eased policy to try to boost housing demand and economic growth. Singapore and Hong Kong are still running tight policies but could ease if house prices fall too far.

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